Beneath the surface, cracks are emerging in the US job market.

A look under the strong numbers of employment It shows that some cracks are starting to form in the US job market. These are the signs:

growth slowdown

Employers added 209,000 people to payrolls in June, the smallest monthly increase since the end of 2020, and downward revisions to the previous two months showed hiring slowed more than previously thought.

In August, the Bureau of Labor Statistics will release preliminary annual revisions to the payroll numbers, which could show more moderation during the first few months of the year.

In addition, recruitment is increasingly concentrated in a few sectors. The payroll diffusion index, which shows the degree of dispersion of hiring across sectors, has largely returned to pre-pandemic levels after peaking in February 2022.

“It seems clear that the labor market is cooling off, and if we are correct about the pending benchmark revisions, the degree to which the labor market has cooled will take many by surprise.“, said Richard Moodychief economist of Regions Financial Corp..

Underemployment

The underemployment rate, a broader measure of labor market slack than the overall unemployment rate, is at its highest level in nearly a year as more Americans report working part-time for economic reasons. This figure registered the largest increase in June since the immediate start of the pandemic.

While some employers continue to struggle to attract and retain workers, which has helped keep wage growth high, rising interest rates and bleak prospects may be starting to weigh on labor demand. .

“There’s more caution around hiring in general right now, and I think part-time for economic reasons is a good sign that it could be seeping into the kind of hiring we’re seeing.“, said Omair Sharifpresident and founder of Inflation Insights LLC.

Temporary job

The number of temporary and contract workers on the payroll fell in June to the lowest level in almost two years. This is often seen as a leading indicator of cooling in the labor market, as temporary staff are often the first to join when demand increases and the easiest to remove when growth slows.

Unemployment of the black population

The report also showed a growing demographic divergence in employment outcomes. The unemployment rate for black Americans rose to 6% in June, the highest level in nearly a year, and black workers accounted for nearly 90% of the increase in the number of unemployed Americans in the past two months.

Black workers areoften the first to lose jobs when demand for workers declines“, said julia pollackchief economist of ZipRecruiter Inc. They tend to be overrepresented in low-wage sectors, which are the first to suffer the impact of falling consumer spending.

“The June jobs report was set to be another hit. Instead, it showed signs of a cooling job market.“, said pollak.